Fitch Ratings has affirmed Ghana’s Long-Term Foreign-Currency (LTFC) and Long-Term Local-Currency (LTLC) Issuer Default Ratings (IDR) at ‘RD’, indicating a debt restructuring process. This affirmation comes after Fitch downgraded Ghana’s LTFC IDR from ‘C’ to ‘RD’ on February 21, 2023, due to a missed Eurobond coupon payment.
Following the downgrade, Ghana has taken significant steps towards external debt restructuring, aiming to address $20 billion of external debt, including official bilateral debt, export credit agencies-backed commercial loans, Eurobonds, and non-insured commercial loans.
The Official Creditor Committee (OCC) has played a crucial role in this process by providing financing assurances. As a result, the International Monetary Fund (IMF) has recently granted approval for a $3 billion three-year Extended Credit Facility.
Fitch anticipates that an agreement between Ghana and the Official Creditor Committee (OCC) will be reached by the end of 2023. Additionally, the treatment of private creditors’ claims is expected to be resolved by mid-2024.
To meet its external debt restructuring goals, Ghana must restructure around $10.5 billion in debt between 2023 and 2026, according to estimates from the IMF.
Moreover, Ghana has initiated the debt restructuring of local currency (LC) bonds held by pension funds. As part of this process, the country is offering an extension of maturities in exchange for higher coupon payments.
Fitch projects that the restructuring of local currency bonds will be completed by autumn 2023, signifying progress in resolving the nation’s financial challenges.
Overall, Ghana’s efforts to restructure both external and local debt indicate a commitment to resolving its financial situation and regaining stability. The official creditor support and IMF board approval provide crucial backing for the country’s ongoing initiatives to improve its economic outlook. As the debt restructuring process unfolds, stakeholders will closely monitor developments to assess Ghana’s path to recovery and long-term sustainability.